From
Mine to Megawatt

The volatility of the critical minerals market and complexity of global supply chain dynamics are changing how energy storage players plan for their project needs. 

This is the environment in which alternative processing hubs are gaining momentum. Keen eyes are trained on Japan, South Korea, and the US due to their advanced capabilities, while resource-rich markets like Latin America are rated highly by processors and refiners. 

Players are also seeking solutions to price volatility and alternatives to current pricing methods, both of which can derail otherwise viable projects. Example solutions include vertical integration for greater supply chain control, and looking beyond established pricing benchmarks to component-linked, floor-based, or hybrid pricing.   

These insights come from DLA Piper’s global survey of 550 companies invested in the BESS and energy storage supply chain. Our survey is supported by in-depth interviews with specialists at POSCO Holdings, Rare Earths Americas, and Argonaut.

From Mine to Megawatt reveals the interplay of commodities and contracts, and how they are reshaping development of the critical minerals market and energy storage.

Japan and South Korea lead critical mineral processing attractiveness

Our research reveals Japan and South Korea as the most attractive locations for building or expanding critical mineral processing over the next five years, closely followed by the US. Established manufacturing, supportive policy, advanced processing capabilities, and competitive build costs are now the basis of execution certainty. 

“Potential capital is more likely to concentrate in regions perceived to offer execution credibility and proximity to supply chains and demand,” says Oliver Wright, Partner at DLA Piper. 

Established processing hubs in Japan and South Korea can offer a more favorable cost base than Western markets seeking to build domestic processing capacity. In the US, for example, tariffs and the need to import specialist equipment can further increase the overall outlay.

Our findings also highlight another route to growth: resource-rich regions. Latin America is rated as highly as Japan and South Korea by processors and refiners, offering long-term processing opportunities and strategic positioning in global supply chains.  

“The objective should be diversification, not isolation,” explains Donald S. Swartz II, CEO & President, Rare Earths Americas. “It is unrealistic to assume that one country can recreate, in a few years, the integrated mining, separation and metals ecosystem that China spent decades building. The more durable solution is a network of complementary supply chains.”

Underwriting during uncertainty

Our research finds the main barrier to investment in critical minerals is not weak demand or a lack of resources, but the difficulty of underwriting BESS projects when future commodity prices are highly uncertain. 

Concentrated processing capacity creates bottlenecks and volatility across lithium, cobalt, nickel, manganese, and graphite – resulting in 40% of respondents viewing price volatility as a major constraint. 

This ripples across the market, with players reporting difficulties in securing bankable long-term offtake, a higher cost of capital, and delays in final investment decisions. While investors are most likely to call volatility a major constraint, battery and technology manufacturers are particularly exposed, with around one in three reporting delivery disruption and higher hedging costs.

“Companies are applying much more conservative assumptions when evaluating project economics,” reports Chulkyoo Lee, Vice President of POSCO’s Energy Materials Development Office at POSCO Holdings. “The focus has shifted away from return based on peak prices toward whether a project can remain viable during down cycles.”

Governments are also responding through price protection, strategic stockpiling, and direct financing to taper costs. 

“Our research provides strong evidence for what until now has been mere suspicion or anecdote: price volatility is acting as a real curb on investment,” explains Alex Jones, Partner at DLA Piper. 

“When you consider that project development can take three to four years, and consensus price forecasts rarely predict radical price adjustments, financial investment decisions are challenging.”

Pricing innovation

Currently, battery mineral and storage-component pricing is anchored to indices largely shaped by dominant markets. But as capital and supply chains diversify, energy storage players are questioning whether those benchmarks remain appropriate. 

Hayden Bairstow, Head of Research at Argonaut, adds that efforts to broaden sources of supply are partly driven by a desire for "a fair price, as opposed to the perceived manipulation of prices."

There is no firm consensus on a single replacement, however. Component-linked, hybrid, and floor-based pricing all drew support in our research, but their practicality varies by commodity and contract structure. 

Downstream players tend to favor component-linked (40%) or hybrid (46%) approaches, while upstream participants show stronger preference for protective mechanisms. Lenders point to price floors (43%) as a solution. 

Regional preferences reinforce the split in approaches, with the US and Germany favoring long-term fixed pricing with periodic resets. But innovation must still work in practice, and each model faces implementation barriers. At the heart of the issue is whether pricing frameworks can underwrite projects, and whether projects can attract capital. 

Growing support for green premiums

At a time when sustainability requirements are shaping investment decisions and the very structure of supply chains, our research shows broad willingness and theoretical support to pay more for accredited green critical minerals, components or supply chains. 

A premium of at least 5% is supported by 81% of players, with materials processors and refiners showing particularly strong appetite: 30% are willing to pay a premium of more than 10%. 

Support for a premium does not necessarily mean players expect to absorb the cost themselves. For example, lenders may expect to set premium levels, while producers may pass costs through. The definition of “green” may also vary by region and position in the value chain, going beyond carbon intensity to responsible sourcing, traceability, and regulatory compliance. 

Regulatory requirements may partly explain willingness to pay, particularly in markets where procurement rules, carbon content, and tax treatments affect the value of accredited materials. However, once commodities enter traded markets, their origin and carbon intensity can become difficult to trace or reconcile. 

“Green premiums will not emerge through voluntary purchasing alone,” explains Brian Hiebert, Partner at DLA Piper. “Regardless of the overwhelming support for the concept, the first step will be an agreed definition of green critical minerals, validated by broadly accepted third parties.”

Longer-term shifts may be driven by market access, where footprint, origin and process transparency become commercial requirements. 

For further information on the research behind this report, view the full methodology. 

Read From Mine to Megawatt to discover where the energy storage market is heading

• Which projects and market participants are most exposed to unpredictable pricing?

• Where will the next generation of critical mineral processing be built?

• Why do different parts of the value chain favor different approaches to pricing risk?